Study: Pandemic costs, limits threaten NJ child care businesses

New Jersey child care providers need higher state subsidies to stay in business during the COVID-19 pandemic, according to a report released Oct. 19 by the National Institute for Early Education Research at the Rutgers Graduate School of Education.
The study noted that child care centers are struggling with increased costs for protective equipment, coupled with state-mandated limits on class size. The limit was recently raised from 10 students to 15, which will provide some relief but not enough.
"Many childcare providers were already struggling to turn a profit before the pandemic, so it shouldn’t surprise anyone if some are now forced to raise rates, turn children away, or close their doors," said Karin Garver, the report's author, in a statement. Garver is an early childhood education policy specialist for the NIEER.
Garver compared the estimated cost increases caused by the pandemic with the rates providers charge and the state subsidies they receive. Under the 10-student limit, costs increased by up to $36 per week for each infant enrolled; $147 per week for each toddler; and $49 per week for each preschooler enrolled. And under the less restrictive 15-student restriction, costs went up byto $69 per week for toddlers and $37 per week for preschoolers. Increases for infants are limited because capacity was already limited to 12 children per room.
According to the report, the state'sChild Care Subsidy Program pays centers up to $241 a week for infants, $201 a week for toddlers, and $167 a week for preschoolers on top of what the centers can charge in the market. Pre-COVID, the market rates ranged from $207 per week for preschoolers to $250 per week for infants.
The study notes that the subsidy rates were already inadequate in many cases and the higher costs are causing greater losses among all age groups. To offset those increases, the report suggests that subsidy rates will have to increase by $40 per week for infants and $63 per week for preschoolers.
Child care providers and their supporters have been sounding the alarm about the difficulties the industry is facing. For example, Bridget O'Brien, the owner of SuperKids Child Care and Learning Center in Summit and the vice president of Early Childhood Education Advocates, has argued that government should treat the industry as critical infrastructure.
At least one state lawmaker is on board with increasing the subsidies. State Sen. Teresa Ruiz, D-29th District, said the childcare system could "collapse" unless the government takes action. "It is critical that we are supporting childcare centers around the state which are facing increased operating costs due to social distancing and sanitation requirements," Ruiz said in the statement accompanying the release of the NIEER report. "The current reimbursement rates fail to meet the cost per child, leaving providers with two choices, either raise the rates on parents who are not eligible for the subsidy or close their facility all together both of which would be detrimental to the communities they serve. They are not only needed now, as we brace for a second wave, we also need to make sure they can keep their doors open going forward."
The research, produced by the Infant and Toddler Policy Research Center at NIEER, was supported by The Nicholson Foundation.

CREDIT: Jeffrey Kanige